Voltas (VOLT IN) – Q2FY26 Result Update – Cautious outlook as UCP margins under pressure – HOLD
Published on 15 Nov 2025
We downward revise our FY27/FY28 earnings estimates by 8.8%/5.7% factoring in correction in UCP margins due to high promotional spending aimed at inventory liquidation & elevated fixed costs arising from low plant utilization. UCP segment declined due to extended monsoons, muted retail offtake & deferred purchase due to GST which resulted in higher channel inventory while margins contracted (-1,110bps) due to high marketing expenses & under-absorption at Chennai & Waghodia plant. VOLT market share has increased in RAC segment (YTD market share of 18.5% as on Sep’25 vs 17.8% as on Jun’25). Reduction in GST will drive a major traction in RAC demand in coming quarters as channel partners starts stocking up while BEE energy-efficiency transition from Jan’26 is expected to trigger pre-buying of old models & product upgrades, keeping near-term margins under pressure. Data centers contribute ~5% of EMPS revenue, expected to rise to ~30% driven by growing demand for MEP & cooling solutions. Voltbek continued growth momentum with market share gains across WM, Refs & SDA, partially offsetting weakness in cooling products. We estimate FY25-28E revenue/EBITDA/PAT CAGR of 9.5%/11.4%/12.6%. we revise SOTP-based TP to Rs1,411 (earlier Rs1,440), implying PE of 39x FY28E. Maintain ‘HOLD’ rating.
